Banking mergers in India have been beneficial to banking sector

These findings also hold true for the recent bank mergers during 2019-2020, for which limited data is available so far.

The study covered all registered M&As in the Indian commercial banking industry, between 1997 and 2020. The sample reduced to includes 17 merger cases during 1997- 2017 and five merger cases during 2019-2020 .

“Presumably, most of the mergers amongst PVBs (private sector banks) were market-driven and those between PSBs (public sector banks) were government-led mergers. Our analysis suggests that the efficiency trends between acquirers and their acquirees were consistent across ownership patterns,” the authors said.

Therefore, singling out the government-led mergers alone as being aimed at accommodating weak banks with stronger ones may not be correct, they added.

The study’s findings suggest that the mean technical efficiency of acquirers increased from 90.88 in the pre-merger period to 93.80 three years post-merger, and 94.24 five years post-merger.